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Real estate values have dropped drastically and some borrowers now owe more than their home is worth! They are walking away...and foreclosures are at an all-time high.

Many people obtained low-interest adjustable-rate mortgages (ARM) a few years ago and now those ARM's are re-setting to much higher interest rates, increasing homeowners' monthly payments;sometimes to levels they can no longer afford to pay.

These are great opportunities to snap up homes on the cheap, but you will need fast money to buy these properties. This is where "hard money" loans come in. They require no income or credit verification. The loan is made based solely upon Loan-To-Value ratio of the property (LTV).

Hard money lenders generally will lend up to 75% LTV. That is 75% of the appraised value of a property. So if you are shopping for wholesale bargains to "flip" these lenders will allow you to purchase the property and obtain some extra cash to do necessary improvements to the property. In Michigan, hard money loans are made only up to 50% LTV due to the especially difficult economic climate in that state.

Hard money loans can be obtained quickly, usually in a week or two. This is important because many "bargain" properties are going to be obtained at auction. Auctions usually require the purchaser to make a non-refundable deposit of a percentage of the auction price when they win the bid. You will then have 30 to 45 days to pay for the property by obtaining a mortgage loan. Conventional mortgages can sometimes drag out past 30 or 45 days before closing, and this would cause a buyer to forfeit his deposit on the auctioned property! Not a good thing, obviously.

Unless you are a wealthy investor, hard money loans are the way to go for most buyers. Find a good mortgage broker to work with. Mortgage brokers act as a middleman between borrower/buyer and a multitude of different lenders they have established relationships with. They charge fees as "points" at closing of the loan. A point = 1% of the loan amount. Often these closing costs can be wrapped up into the new loan balance. Your only out-of-pocket cost will be to obtain a current property appraisal.

Most hard money loans are made by private investors, not banks, so using a good mortgage broker is really the only way to go. They will be your partner in your real estate investing for years down the road.

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Hard Money Lending For Michigan Investment Real Estate

It's no secret that real estate values have drastically decreased in recent times, which has left many homeowners in a position where their house is worth less than their mortgage.

This is partially due to the relaxed lending practices that occurred in recent years, which allowed many borrowers to obtain low-interest, adjustable-rate mortgages (ARM) - and now that these ARM's are re-setting to much higher interest rates, they're finding that they can no longer afford their monthly mortgage repayments.

For those savvy people who are interested in investing in property in Michigan, this situation is creating incredible opportunities to buy investment properties - specifically Detroit Investment Properties. In order to snap up these bargains, however, you'll need access to fast money, which is where Hard Money Loans come into the picture.

Hard money lenders typically lend up to 75% of the Loan-To-Value (LTV) ratio; thus, is a home is appraised at a value of $100,000, the lender will generally be willing to lend you up to $75,000.

In Michigan, real estate values have taken a big hit and the economic climate is particularly difficult, so as a result, hard money loans in Michigan are generally only available for up to 50% of the appraised value of the home. But there ARE exceptions. We work with a lender that is lending 70% - as long as the homes are in the right parts of Detroit. Beyond that, there are SO many deals right now that it is VERY possible to pick up a house for less than 50% LTV - in PERFECT condition.

With these types of transactions, time is of the essence, as many foreclosures and bargain-priced properties are sold at auction. For this reason, you need to having your finances arranged prior to bidding, as auctions usually require that you make a non-refundable deposit, equal to some decided percentage of the auction price. You also need to settle the transaction within a specified time frame of around 30-45 days, and if settlement is not achieved within this period, you risk losing your deposit.

If you're interested in sourcing a hard money loan, Your best bet is to work with a wholesaler. A "wholesaler" is an investor that negotiates good deals on investment properties and makes a small margin when they sell the property to another investor.

The important thing to remember is that most hard money loans are offered by private investors, not banks, so the loan process can be very different to conventional lending applications. Using a wholesaler who has experience with this type of transaction is your best bet, as good ones have established relationships with people that do hard money lending every day. Specifically when you're new to something, referrals are the best route to go. If you can find someone who has a lot of experience with Michigan Investment Real Estate, chances are they've used a hard money lender a hundred times. Follow the track record.

I'm a wholesale investor. My company, LBHoldings, is located in Ann Arbor. I spend a lot of time negotiating with banks to get the best deals on Metro Detroit REOs.A great deal of my time and money is spent on marketing to find the best Metro Detroit real estate. One of the reasons investors keep coming back to me is that I find a TON of deals and make just a little on each of them.

Article Source: ArticlesBase.com - Hard Money Lending For Michigan Investment Real Estate